The new Open Acreage Licensing Policy (OALP) and the setting up of National Data Repository represent significant reform in hydrocarbon exploration and production, in India. Discuss.

The new Open Acreage Licensing Policy (OALP) and the setting up of National Data Repository represent significant reform in hydrocarbon exploration and production, in India. Discuss.

Approach:

  • Introduce with new policy HELP and how OALP and NDR were brought in as part of it
  • Discuss OALP and NDR and their benefits
  • Highlight some concerns that remain in boosting hydrocarbon exploration and production in India
  • Conclude appropriately
Model Answer :

To enhance domestic oil & gas production, bring substantial investment in the sector and generate sizable employment, the government of India had come up with the Hydrocarbon Exploration and Licensing Policy (HELP) in 2016. To further open up the hydrocarbon exploration and production industry in India, the National Data Repository (NDR) and Open Acreage Licensing Policy (OALP) were launched under HELP.

 

  1. Open Acreage Licensing Policy (OALP):
  • The new policy places greater discretion in the hands of explorers and operators, who can choose the blocks for exploration and bid for them. Earlier explorers were forced to bid for blocks chosen by the government.
  • Companies may also submit applications through the year and not just twice a year, as was the case earlier.

Benefits:

  • This gives the government a better chance to woo serious energy investors in the sector to India.

 

  1. National Data Repository (NDR):
  • The lack of seismic sedimentary basin data (52% of India’s basins had not been appraised as yet) had been hampering the oil and gas exploration and production sector in India.
  • NDR is envisaged as a centralised database of geological and hydrocarbon information that will be available to all.

Benefits:

  • Besides allowing potential investors to make informed decisions, this will open up a new sector in India.
  • There are many companies around the world whose business is to simply explore hydrocarbon basins and sell the information they gather. The new initiative seeks to incentivise such prospectors.

However, some concerns remain in wooing investors:

  • The incentives to bid for acerage for those who have already invested in exploration of an area are seen as insufficient. A revenue-share from production may be considered for the hydrocarbon sector, similar to mining.
  • There are fears that attracting enough investment may be difficult as investors have had some unpleasant past experiences in India with large projects such as KG-D6. Proven reserves in other parts of the world, such as the Gulf of Mexico, may lead to dulling interest in Indian acreage.

Despite the concerns, HELP with OALP and NDR as its components represents a significant step towards reform and revival of the hydrocarbon exploration and production in India and meet the government’s objective of reducing oil imports by 10% by 2022. Concerns of various investors and stakeholders must be heard and incorporated in the policy to further incentivize investment in this sector.

Subjects : Editorials

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